pvtltd.co

Investor readiness

ESOP management in India.

Manage ESOP grants, vesting, exercises, and pool tracking for Indian startups.

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed:
Starting from Contact usTypical timelineESOP management

ESOPs are easier to administer when the company has a clear system for grants, vesting, and exercise. PVtltd helps make the workflow visible and organized.

What is included
  • • Grant tracking
  • • Vesting schedule visibility
  • • Exercise workflow support
  • • Option pool visibility
  • • Investor-ready reporting support
Documents required
  • • Approved ESOP scheme and special resolution
  • • Grant-wise employee details
  • • Cap table and option pool summary
  • • Vesting and exercise records
  • • Valuation / FMV support and tax working papers
Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis
  • • Section 62(1)(b) of the Companies Act 2013
  • • Rule 12 of the Companies (Share Capital and Debentures) Rules 2014
  • • Rule 3(8) and Rule 3(9) of the Income Tax Rules 1962
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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1Approval

Confirm the scheme approval path

We verify the special resolution and plan terms so the ESOP structure sits on a valid Companies Act approval base.

Step 2Tracking

Track grants and vesting

The workflow records each grant, vesting milestone, and exercise condition so the company has one current source of truth.

Step 3Exercise

Handle exercise and issue records

When an employee exercises, we keep the allotment, certificate, and cap table update trail aligned with the transaction.

Step 4Reporting

Maintain the reporting pack

We keep the ESOP reporting file ready for board, investor, and tax support so later reviews are straightforward.

AEO summary

ESOP management helps the company keep grants, vesting, and exercise tracking organized as part of a broader investor-ready equity workflow.

Why ESOP admin gets messy

ESOP administration gets messy when grant terms, vesting schedules, and exercise records live in different places. The company then has to reconstruct the history every time it needs to explain dilution or tax treatment.

A single, current workflow prevents that scramble and keeps the employee ownership story easy to explain.

  • • Grants need an approved scheme.
  • • Exercises need a clean allotment trail.
  • • The cap table should always reflect the current option pool.

What the company must keep aligned

The statutory approval, the employee records, and the cap table update should all tell the same story. If one piece is missing, the scheme becomes harder to defend in diligence and taxation review.

That is why the reporting pack matters as much as the grants themselves.

  • • Special resolution and MGT-14 should line up with the scheme.
  • • Exercise timing should match the FMV and payroll trail.
  • • The data room should contain the scheme, grant, and vesting records.

Government fees

Fee breakdown

ItemFeeNotes
Special resolution filing (MGT-14)As per MCA fee tableApplicable when the ESOP scheme or approval is required to be filed with the Registrar.
Share certificate issuanceAs per stamp lawState stamp duty can apply when share certificates are issued after exercise or allotment.
Tax / payroll reporting supportNilThe perquisite computation is a compliance output, not a government fee.

Timeline

Typical turnaround

Typical timeline usually means a 1 week turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

Government fees depend on the connected filings such as board resolutions, special resolutions, or share certificate issuance under the applicable MCA and state stamp rules.

Free tool

ESOP dilution & tax estimator

Enter your cap table basics to see the dilution and perquisite tax impact.

Perquisite taxed at exercise under Section 17(2)(vi) IT Act.

Full analysis

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FAQ

Frequently asked questions

Does a Private Limited company need shareholder approval to grant ESOPs?
Yes. Section 62(1)(b) of the Companies Act 2013 and Rule 12 of the Companies (Share Capital and Debentures) Rules 2014 require shareholder approval by special resolution before ESOPs are granted.
What is the minimum vesting period for unlisted company ESOPs?
Rule 12 prescribes a minimum one-year vesting period from the date of grant. A company can choose a longer schedule, but not a shorter one.
When are ESOPs taxed: grant, vesting, or exercise?
Section 17(2)(vi) of the Income-tax Act 1961 taxes the perquisite at exercise, not at grant or vesting. The taxable event is the allotment of shares pursuant to exercise.
How is the perquisite value for unlisted company ESOPs computed for TDS?
For unlisted shares, the perquisite is generally the FMV on the exercise date minus the exercise price, with FMV determined under Rule 11UA or the applicable valuation route. TDS is then worked through Section 192 as salary income.
What ROC filing is required when shares are allotted on ESOP exercise?
The company files PAS-3 return of allotment within 30 days under Section 39 and the associated filing rules. The ESOP register in SH-6 should also stay current under Rule 12.

Canonical reference: https://www.pvtltd.co/services/esop-management

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We can help with the filing, the legal mapping, and the follow-up work that keeps the company compliant after submission.

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